On The Money: Fed plans for rate hikes despite Trump criticism | Stock market in record bull run | US, Mexico may be close to ‘handshake’ NAFTA deal | Liberal groups rally against consumer bureau pick

Happy Wednesday and welcome back to On The Money, where we’re wondering what Google *doesn’t* know about us at this point. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL: The Federal Reserve is likely to move ahead with planned interest rate hikes despite criticism from President Trump and the potential economic damage of mounting trade tensions, according to notes released Wednesday from the central bank’s July meeting.

Members of the Federal Open Markets Committee (FOMC), the Fed’s monetary policymaking board, expressed confidence that a growing economy would continue to justify increasing federal interest rates toward historic neutral levels, according to minutes from its July 31 to August 1 meeting.

Fed officials warned that a prolonged trade war could damage the U.S. economy and said they had continued to see signs of delayed expansion as firms braced for higher costs. But overall, they were optimistic that the U.S. would enjoy strong growth throughout 2018, citing rising inflation and strong jobs and manufacturing data received earlier.

“Members expected that further gradual increases in the target range for the federal funds rate would be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term,” read the notes.

I break down the latest from the Fed here.

 

Remember: The meeting was the FOMC’s first since Trump criticized Fed Chairman Jerome Powell and his colleagues for raising interest rates, which increases the costs of borrowing to slow down the economy.

Trump renewed his criticism Monday, telling Reuters he was “not thrilled” with Powell, who he appointed to lead the Fed and that the bank should do “what’s good for the country” by holding off on rate hikes.

There’s little doubt the Fed is going to push ahead with rate hikes as they deem appropriate, but today’s minutes show the extent of the bank’s optimism on the economy. Powell has also shown little regard for Trump’s wishes, so we can expect the Fed to follow through on its projections of two more hikes.

 

However: While Fed officials were confident in the overall state of the economy, they discussed rising concerns among U.S. businesses that trade tensions could pose serious risks to continued growth.

Fed officials said the trade tensions hadn’t severely stunted the growth of the economy yet, but could do so if they continued for much longer.

“Most businesses concerned about trade disputes had not yet cut back their capital expenditures or hiring but might do so if trade tensions were not resolved soon,” the minutes read.

 

What comes next: Powell will address the Jackson Hole summit on Friday, where’s he’s likely to discuss the Fed’s policy path and the state of the global economy. We’ll see what light he sheds on the Fed’s plans.

 

ON TAP TOMORROW

• Senate Banking Committee: Vote on the nominations of Kathy Kraninger to be Consumer Financial Protection Bureau director, Kimberly Reed to be president of the Export-Import Bank, Elad Roisman to be a member of the SEC, Michael. Bright to be president of the Government National Mortgage Association, Rae Oliver to be inspector general at the Department of Housing and Urban Development, and Dino Falaschetti to be director of the Office of Financial Research, 9:30 a.m.

 

LEADING THE DAY

Mexican trade official says NAFTA deal with US may be hours away: U.S. and Mexican trade officials on Wednesday could strike a deal on updating the North American Free Trade Agreement (NAFTA), according to news reports. 

Mexico and the United States have been in talks over the past few weeks without Canada, the third country in the deal, trying to solve major issues on autos and investment disputes. 

“We hope that we’ll have a solution in the next couple of hours, or the next couple of days,” Mexican Economy Minister Ildefonso Guajardo told reporters before meeting with U.S. Trade Representative Robert Lighthizer on NAFTA, Reuters reported.

Despite the growing optimism around a deal, Lighthizer’s office cautioned that significant issues remain and there is no agreement yet. There has been talk that the White House will make a “handshake” agreement on Thursday but that the day was fluid based on how far U.S. and Mexican negotiators get on Wednesday. The Hill’s Vicki Needham brings us up to speed here.

 

Dozens of left-leaning groups urge Senate to reject consumer pick: Dozens of liberal organizations, civil rights groups and labor unions asked senators on Wednesday to reject President Trump’s nominee to lead the consumer bureau over her connections to the administration’s controversial immigration policies.
In a letter to the Senate Banking, Housing and Urban Affairs Committee, 57 groups urged senators to oppose Kathy Kraninger’s nomination to lead the Consumer Financial Protection Bureau (CFPB). The panel is expected to advance her nomination to the full Senate on Thursday.

The groups say Kraninger, an associate director at the White House Office of Budget and Management (OMB), is unfit to lead the financial regulator because of her ties to Trump’s zero-tolerance immigration policy that led to the separation of thousands of migrant families at the U.S. border.

“Either Ms. Kraninger failed terribly at her job, putting the wellbeing and lives of thousands of children in danger, or, even more concerning, she purposefully sought to run an ineffective, cruel process in order to punish children and/or their parents, in which case she lacks the moral sense or standing to hold a government position,” the groups wrote. “In either case, her nomination should be rejected.”

I’ve got more on their concerns here.

 

GOOD TO KNOW 

• U.S. stock markets set a record Wednesday, marking the longest bull run in history.
• Investigators in New York state have issued a subpoena to President Trump’s former personal attorney, Michael Cohen, as part of a probe into the Trump Foundation, The Associated Press reported Wednesday.
• Fed chief Powell, in a private discussion with Sen. Tim Scott (R-S.C.) last week, said he had not spoken to President Trump about interest rates and would remain independent from political interference, according to the Washington Post.
• Politico talks to the U.S. steel workers who’ve been put “on edge” by Trump’s tariffs.
• The booming U.S. economy has posed challenges for other nations trying to keep up, according to Bloomberg.
• U.S. banking regulators said on Wednesday they were easing liquidity rules on the treatment of municipal securities, allowing banks to count more of the assets toward certain liquidity requirements, according to Reuters.
• Senate Majority Leader Mitch McConnell on Wednesday set up a procedural vote on the nomination of Richard Clarida to serve as Fed vice chairman. He’s likely to be confirmed with notable bipartisan support.
• Saudi Arabia has cancelled its plan to list the domestic and international stock of state oil megalith Aramco.

 

ODDS AND ENDS

• Indicted Rep. Duncan Hunter (R-Calif.) overdrew his personal bank account more than 1,000 times to rack up $38,000 in overdraft and other banking fees.
• The EU is expected to give Apple unconditional approval to buy the music service Shazam, Reuters reported Wednesday.